Our reckons on the Future of Open Banking in Aotearoa
Recently Jason was invited to be a guest on Blinkpay's Q&A Podcast around Open Banking in New Zealand. A link to the full podcast at the end of this post.
It’s all about the ground work, and why we’re invested
At Usable Balance, we’re not a payments company. We’re an automated accounting product for small businesses. But we realised early on that direct bank connectivity was crucial. As Jason explained, we have to think beyond the immediate future. It’s not about the payment solutions we have today; it’s about enabling what the next generation will want to do.
To get there, we need to build the underlying infrastructure first. We need solid rails to build the innovative solutions of the future on top of. That’s the real opportunity with open banking in New Zealand.
“This is something we've been talking with people a bit about, around how banks need to have these rails in place because that allows people to build innovative solutions on top of it.”
The great fee debate
It’s brewing in the US over whether banks should be able to charge for access to financial data. Jason’s take? Making everything absolutely free is a risk. It incentivises banks to do the bare minimum required by regulation, and that’s not what anyone who wants a thriving ecosystem should want. A middle ground is needed.
For commercial use cases, paying for access makes sense. It recognises the value of the service and feeds back into the ecosystem. But we also must ensure we’re not excluding non-profits, charities, and people building financial literacy tools. There should be a way for them to have fee-free access. It’s a balancing act between creating a viable ecosystem and preventing innovation from being stifled.
Changing the way to allow others to access your bank accounts
There’s a lot of excitement around decoupled flows for logging in and allowing organisations access to your banking payments and account information, and the tech is undeniably cool. But Jason played devil’s advocate, pointing out two potential issues:
It’s a new thing. New user flows can be confusing for customers, creating a risk of spoofing and scams. Banks need to be on the front foot with educating their customers on what a legitimate decoupled flow looks and feels like.
It’s not for everyone. Decoupled flows are great for consumers and small businesses who have a mobile banking app. But what about Steve in accounts at Air New Zealand? He’s probably not using a mobile app for his work. We must build an ecosystem that scales and is just as useful for enterprise as it is for consumers.
"If what you're trying to do is build an ecosystem that scales... that's gonna be as useful for enterprise as it is for consumers and small businesses, um, that we need to be thinking about these use cases and making sure we don't lose them."
Eat your own dog food
When asked what one change he’d make to open banking in Aotearoa, Jason’s answer was simple: he wants to see banks consuming their own APIs.
It’s the ‘eat your own dog food’ principle. If a bank builds something for its own internal use, it’s going to be well-architected and enterprise-ready. If they’re just building to meet a compliance standard for a consumer model, it’s going to be more limited. When banks start using their own and each other’s APIs, they’ll see what works and what doesn’t. They’ll see the friction points and be incentivised to improve. This is how we’ll get a better system for everybody.
A continuous process of improving things
Open banking is not a "one and done" project. We aren't building a static ecosystem. It's a continuous process of improving, fixing problems, and developing new standards. This requires dedicated resources from the banks and ongoing engagement from the entire industry.
The API standards we have now were developed five years ago. The conversation has changed since then, and it will keep changing. That’s why industry engagement is so vital. It’s still early days, and the goal isn't perfection on day one. The goal is to build something that is commercially viable and genuinely helps people and businesses throughout New Zealand.
You can listen the full podcast here: